Australia seals $15b in business deals with China as tensions ease

Shanghai: Trade Minister Simon Birmingham will witness the signing of business deals totalling $15 billion involving Australian and Chinese companies at an international imports fair in Shanghai, as relations between the two countries thaw.

More than 150 Australian companies have participated in the Chinese International Import Expo, one of Chinese president Xi Jinping’s major diplomatic events this year.

Trade minister Simon Birmingham speaking at the launch ceremony of Australian Pavillion at the China International Import Expo.Credit:Sanghee Liu

A report released by the Australian Chamber of Commerce in China shows what is at stake in the recent improvement of ties between the Australian and Chinese governments, which has taken a significant step forward this week. Foreign affairs minister Marise Payne is due in Beijing on Thursday to meet with her counterpart Wang Yi.

A survey of Australian companies in China found tensions in the relationship between the two countries was their biggest risk, with more than half saying their business had been negatively affected.

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Almost three-quarters (72 per cent) said China was a difficult place to do business, a notable increase on previous years. Around half said they had noticed increased attention from Chinese authorities.

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The research was compiled by the University of Melbourne and KPMG.

AustCham Beijing chief executive Nick Coyle said the survey results reflected that Australian businesses in China were anxious that strains in the diplomatic relationship had taken longer than expected to bounce back.

“The fact that Minister Payne is coming up here is a really positive sign,” he said.

Almost a third (28 per cent) of the Australian businesses surveyed said the trade war between the US and China was having a negative impact.

The EU Chamber of Commerce in China on Tuesday complained that, while President Xi’s speech to the trade fair on Monday spoke of further opening up China’s markets to foreign companies, the announcement was “without sufficient concrete measures or timelines being introduced”.

Doing deals in Shanghai.Credit:Sanghee Liu

Mr Xi pledged an expansion of free trade zones, but the EU Chamber of Commerce in China said European businesses were “increasingly disenchanted with free trade zones”.

Mr Coyle said free trade zones had been a good early step, but more needed to be done to create “better trade conditions in general” for foreign companies.

Mr Xi’s goal of China importing $US30 trillion ($41.5 trillion) in foreign goods and $US20 trillion in services in the next 15 years would only be achieved if business conditions improve for foreign companies, he said.

Australia’s free trade agreement with China, which has lowered tariffs on many food and agricultural items, means complaints about protectionism are more muted from Australian companies than their US and European counterparts.

However, Australian companies are closely watching changes to e-commerce laws due to take effect in January, which will regulate the cross border flow of the huge quantities of Australian vitamins and baby powder purchased by Chinese consumers online.

Mr Birmingham said as China modernised its rules Australia wanted to make sure they give “appropriate transition times for businesses to ensure they are ready to comply”.

“I would urge China to act in the spirit of President Xi’s comments in his speech yesterday, where he acknowledged the importance of digital trade and e-commerce and committed overall to continued opening up.”

Mr Coyle said many Australian companies were using warehouses in the free trade zones when they posted goods to Chinese online shoppers as a loophole to avoid complying with local health labelling regulations. He said they should have been aware for some time they would need to comply with new laws.